Disability ministry’s problems revealed in confidential memo

As the Government prepares a review of the troubled Ministry of Disabled People, a confidential memo reveals its many flaws.

Whaikaha - The Ministry of Disabled People - took on huge financial risks during its hurried establishment and has not been equipped with the ability to manage them, a confidential briefing shows.

The ministry has been in the spotlight after it abruptly restricted funding to disabled people last month because it was about to run out of money - a bungle which led to the demotion of former minister Penny Simmonds.

The National-led Government confirmed a review of disability support services today, saying spending had roughly doubled since 2005.

Disability Issues Minister Louise Upston said the review would look at what could be done to strengthen the long-term sustainability of support services while also giving certainty about what disabled people could access with their funding.

A briefing to the former Finance Minister Grant Robertson from September, obtained by the Herald, showed that officials flagged a number of significant problems within the ministry, which is responsible for commissioning $2.2 billion in support services each year.

The Department of Prime Minister and Cabinet (DPMC) stocktake said Whaikaha’s relatively short six-month establishment period placed “significant pressure” on the team tasked with setting up the ministry.

As a result, the team employed a “lift and drop” approach by simply transferring staff, functions, roles and responsibilities directly from the Ministry of Health to the new ministry.

Penny Simmonds was stripped of the portfolio and demoted last week in a Cabinet reshuffle. Photo / Mark Mitchell

That meant limited due diligence was carried out, especially given the size, complexity and ageing systems which were used to administer disability support services.

Whaikaha’s leadership inherited a number of risks, including a history of cost increases above inflation. Despite these increases, it had few levers to control spending and “a lack of financial management and monitoring capability to predict and respond to financial challenges”, the briefing said.

DPMC also identified a number of operational risks: “[The ministry’s] administration of disability support services is underpinned by legacy IT systems, ageing business practices, and weak assurance, audit, monitoring and fraud analysis functions which are not fit for purpose.”

The new ministry inherited workforce shortages and capacity problems from the Ministry of Health. As of September, 97 of its 289 positions remained vacant.

While the ministry now had a new organisational model, which reflected its new mandate, its operating budget had not been scaled to meet the demands of its $2.2 billion in annual commissioning, its new system leadership and policy functions, the briefing said.

DPMC reviewed Whaikaha’s five main workstreams and graded three of them as “mixed” and two as “problematic”. One of the problematic areas was the ministry’s work on building partnerships. Trust among disabled Māori people in particular was “eroding”, the briefing said.

Upston said she received the briefing when she took over the portfolio last week and was “very concerned” about the financial pressure the ministry was under. The disability support system was “not fit for purpose”, she said.

“It would appear to me that while the ministry was established with the best intentions, the previous Labour Government set it up in a hurry and was aware that disability support services were not sustainable under the current settings.”

Labour Party disability issues spokeswoman Priyanca Radhakrishnan said disabled people and their advocates had long sought a dedicated ministry.

“There are a large group of people - about 1.1 million New Zealanders [who] identify with a disability and they face challenges virtually more than any other group in New Zealand and therefore want a dedicated ministry.”

She agreed that the new ministry had inherited problems from the Ministry of Health which were “less than ideal” and said it was working to establish adequate funding systems.

Radhakrishnan said Simmonds should have ensured the ministry had the funding it needed to meet cost pressures while it worked on its systemic problems.

The extent of Whaikaha’s troubles emerged last month when the ministry suddenly restricted funding for respite care and equipment purchases.

Simmonds said at the time that the ministry was about to run out of the money it was given in last year’s Budget to pay for disabled people’s allowances. She and ministry CEO Paula Tesoriero later apologised for the way the changes were announced.

The funding announcement came without warning and took disabled people, advocates and health professionals by surprise.

It also surprised Prime Minister Christopher Luxon, who removed Simmonds from the portfolio in a reshuffle last week.

The Government agreed to top up the funding for allowances. It later relaxed some of the restrictions, allowing disabled people to spend again on essential therapy and regional travel for carers, but many of the new limitations remained in place.

The ministry provides support services to 45,000 people and equipment to around 100,000 people.

Isaac Davison is an Auckland-based reporter who covers health issues. He joined the Herald in 2008 and has previously covered the environment, politics, and social issues.